Bottom line: AUDUSD bullish structure remains intact as AUDUSD bounces from a 4 month old support trend line at 0.6820.
Technical Analysis:
AUDUSD bulls remain in control as Aussie Dollar bounces right at trend line support around the 0.6820 zone. Please also note that prices are bouncing from near the fibonacci 0.618 retracement of the rally between 0.6751 and 0.7032 respectively. Looking at the medium term wave counts, the AUDUSD seems to be progressing higher in Wave (3) towards 0.7200 levels at least. Wave (1) had terminated around 0.6929, followed by Wave (2) dropping towards 0.6750 respectively. Since then Waves 1 and 2 of (3) have terminated at 0.7032 and 0.6820 levels respectively. If the above counts are correct, prices should stay above 0.6750 levels and push higher towards 0.7200 levels as the 3rd of (3) rd wave progresses. Alternately, a break below 0.6750 would indicate that AUDUSD might drop to fresh lows below 0.6668, before turning higher again. At the moment, with numerous convergences of trend line and fibonacci retracements along with wave counts are suggesting a rally towards 0.7200 before a meaningful correction takes place. A safe trading strategy is to remain on the long side, against 0.6650 with potential price targets above 0.7200 levels respectively. Also note that an engulfing bullish candlestick pattern is in the making on 4H chart. Furthermore, if Wave 3 of (3) is extended then prices may push significantly above 0.7200 levels, as Wave (3) nears to termination. Lastly, the RSI is showing a bullish divergence with prices dropping to fresh lows below 0.6850 while RSI holding above 30 levels. With all the above facts intact, watch out for a bullish reversal from here (0.6840) towards 0.7200 levels at least. Only a break below 0.6750 would delay matters and change the above structure.
Prepared by
Harsh Japee, Technical Analyst.
AUDUSD Chart
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